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We applied for a reverse mortgage and previously operated a small Bed and Breakfast to supplement our income. However, we closed it at the end of last year after my husband had a stroke, and I became his full-time caregiver. He is improving, learning to walk again, and undergoing therapy. We have been working with this agency for almost a year, but every time we reach a certain point in the process, they request additional documents, such as proof of medical bills. We have gone through two credit counselors and two appraisals due to expired time limits. The most recent appraiser was challenging to work with—she did not ask any questions, made incorrect assumptions about the property, and refused to take input from us as homeowners. We have submitted a written response to the agent we’re working with, but it appears we are being denied based on this appraisal. We believe we have been unfairly treated. The appraiser arrived early on a Monday morning, following a weekend when our family had been visiting to help care for my husband. I don’t drive, and my husband cannot, so our family takes us out occasionally. When she saw breakfast dishes in the sink, she assumed we had been serving guests and were still running a Bed and Breakfast. She did not ask about the situation, and if she had, I could have explained that the family had helped with breakfast before we left for a doctor’s appointment. Instead, she assumed and reported that we were still operating a Bed and Breakfast. Is there any way to challenge this?
By Linda on 11.17.2019Hello Linda,
Every borrower has the right to challenge any information in the appraisal report. The appraiser serves as the eyes and ears of both the lender and HUD during the evaluation process.
If the appraiser found current advertising for your Bed and Breakfast—such as an active Airbnb or VRBO listing tied to your address—they are required to include this in their report.
While I don’t know exactly what details the appraiser documented—such as the presence of dishes or assumptions about business activity—you can take steps to dispute their findings:
How to Challenge the Appraisal Report:
- Check for Active Listings: Ensure your property is not still appearing on rental platforms. If you find any lingering ads, remove them immediately.
- Confirm License Termination: If you previously held a business license for the Bed and Breakfast, provide documentation proving it was officially terminated.
- Request a Reconsideration: Contact your lender, explain the situation, and ask what documentation they require to confirm that the business has permanently closed.
Why This Matters for Your Reverse Mortgage:
HUD does not allow transient rental use of a property, including Bed and Breakfast operations. If the appraiser found any evidence suggesting the property is still being used for short-term rentals, the lender must either:
- Obtain proof that the business has fully ceased operations
- Deny the loan
The challenge here is that this is not just a zoning issue—it’s a usage issue. A property previously used for an ineligible purpose could, in theory, resume that use after loan closing. Because of this, lenders need clear evidence that short-term rental activity has truly ended and will not resume.
If you can provide documentation proving the business closed last year, this would strengthen your case significantly.
???? Related: What are the Reverse Mortgage Property Requirements
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